Question 1

-Refer to the above table. For each level of employment of labor shown

Accepted Answer

A)  marginal product declines. 
B)  marginal product holds constant. 
C)  marginal product rises. 
D)  marginal product falls for all employees beyond the 10th unit of labor. 
A)  marginal product declines. 
B)  marginal product holds constant. 
C)  marginal product rises. 
D)  marginal product falls for all employees beyond the 10th unit of labor.

Question 2

Which of the following statements is TRUE about the market and individual firm's supply curve for labor?

Accepted Answer

A)  The market supply curve is perfectly elastic and the individual firm's supply curve is perfectly inelastic. 
B)  The market supply curve is perfectly inelastic and the individual firm's supply curve is perfectly elastic. 
C)  The market supply curve is more elastic than the firm's supply curve. 
D)  The market supply curve is more inelastic than the firm's supply curve. 
A)  The market supply curve is perfectly elastic and the individual firm's supply curve is perfectly inelastic. 
B)  The market supply curve is perfectly inelastic and the individual firm's supply curve is perfectly elastic. 
C)  The market supply curve is more elastic than the firm's supply curve. 
D)  The market supply curve is more inelastic than the firm's supply curve.

Question 3

The individual firm operating in a perfectly competitive labor market

Accepted Answer

A)  can hire more labor only by offering a higher wage. 
B)  faces an inelastic demand for labor. 
C)  will pay less to the additional labor employed. 
D)  can buy all the labor it wants at the going market wage rate. 
A)  can hire more labor only by offering a higher wage. 
B)  faces an inelastic demand for labor. 
C)  will pay less to the additional labor employed. 
D)  can buy all the labor it wants at the going market wage rate.

Question 4

The price elasticity of demand for labor will be smaller, the

Accepted Answer

A)  greater is the price elasticity of demand for the final product. 
B)  easier it is to employ substitute inputs in production. 
C)  smaller is the proportion of wage costs in the total cost of production. 
D)  longer is the time period under examination. 
A)  greater is the price elasticity of demand for the final product. 
B)  easier it is to employ substitute inputs in production. 
C)  smaller is the proportion of wage costs in the total cost of production. 
D)  longer is the time period under examination.

Question 5

-In the above figure, the competitive firm will employ the quantity of labor

Accepted Answer

A)  equal to Lc. 
B)  equal to Lb. 
C)  less than Lb. 
D)  greater than Lc. 
A)  equal to Lc. 
B)  equal to Lb. 
C)  less than Lb. 
D)  greater than Lc.

Question 6

A profit-maximizing firm will hire workers up to the point at which

Accepted Answer

A)  MRP  MFC. 
D)  MRP = MPP. 
A)  MRP  MFC. 
D)  MRP = MPP.

Question 7

When the price of a product decreases, the marginal revenue product curve in a perfectly competitive market

Accepted Answer

A)  does not change. 
B)  becomes steeper. 
C)  shifts to the right. 
D)  shifts to the left. 
A)  does not change. 
B)  becomes steeper. 
C)  shifts to the right. 
D)  shifts to the left.

Question 8

-In the above table, what is the marginal revenue product of the 4th worker?

Accepted Answer

A)  $920 
B)  $700 
C)  $400 
D)  $80 
A)  $920 
B)  $700 
C)  $400 
D)  $80

Question 9

A firm in a competitive input market can

Accepted Answer

A)  hire workers at the going wage. 
B)  hire additional workers only by raising wages. 
C)  hire additional workers at lower wages because those who are still unemployed are anxious to work. 
D)  hire additional workers only after a long search process. 
A)  hire workers at the going wage. 
B)  hire additional workers only by raising wages. 
C)  hire additional workers at lower wages because those who are still unemployed are anxious to work. 
D)  hire additional workers only after a long search process.

Question 10

The supply of labor to the individual firm in a perfectly competitive market is

Accepted Answer

A)  perfectly inelastic at the current equilibrium employment level. 
B)  perfectly elastic at the current market clearing wage rate. 
C)  downward sloping. 
D)  equal to the marginal revenue of output. 
A)  perfectly inelastic at the current equilibrium employment level. 
B)  perfectly elastic at the current market clearing wage rate. 
C)  downward sloping. 
D)  equal to the marginal revenue of output.

Question 11

What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

Accepted Answer

A)  The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will increase. 
B)  The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will decrease. 
C)  The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will decrease. 
D)  The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will increase. 
A)  The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will increase. 
B)  The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will decrease. 
C)  The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will decrease. 
D)  The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will increase.

Question 12

The equilibrium wage rate in an industry is found by

Accepted Answer

A)  the intersection of the market demand curve for labor and the marginal revenue product curve of labor. 
B)  the intersection of the firm's demand curve for labor and the firm's supply curve of labor. 
C)  the intersection of the market demand curve for labor and the market supply curve of labor. 
D)  negotiations between the union leadership and the managers of the firms. 
A)  the intersection of the market demand curve for labor and the marginal revenue product curve of labor. 
B)  the intersection of the firm's demand curve for labor and the firm's supply curve of labor. 
C)  the intersection of the market demand curve for labor and the market supply curve of labor. 
D)  negotiations between the union leadership and the managers of the firms.

Question 13

For a perfectly competitive firm, the value of the marginal product of labor falls as more workers are hired because of the diminishing

Accepted Answer

A)  output price. 
B)  marginal physical product of labor. 
C)  price of labor. 
D)  marginal cost of production. 
A)  output price. 
B)  marginal physical product of labor. 
C)  price of labor. 
D)  marginal cost of production.

Question 14

For a firm that uses land, labor and capital as inputs, how should the inputs be utilized in order to minimize total costs?

Accepted Answer

Given a particular rate of production, t

Question 15

-In the above figure, if the wage rate fell below Wb, in the short run the firm would

Accepted Answer

A)  hire more workers. 
B)  fire several workers. 
C)  reduce its level of output. 
D)  keep all its input levels the same as they were before. 
A)  hire more workers. 
B)  fire several workers. 
C)  reduce its level of output. 
D)  keep all its input levels the same as they were before.

Question 16

If we assume competitive labor markets, the supply curve of labor when the firm is a monopoly is

Accepted Answer

A)  upward sloping. 
B)  vertical. 
C)  horizontal. 
D)  downward sloping. 
A)  upward sloping. 
B)  vertical. 
C)  horizontal. 
D)  downward sloping.

Question 17

The demand for labor is

Accepted Answer

A)  derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money. 
B)  derived from the demand for the final product being produced. 
C)  derived from a utility maximizing process similar to that used to derive the demand curve for goods and services. 
D)  totally unrelated to the demand curve for the final product. 
A)  derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money. 
B)  derived from the demand for the final product being produced. 
C)  derived from a utility maximizing process similar to that used to derive the demand curve for goods and services. 
D)  totally unrelated to the demand curve for the final product.

Question 18

-According to the above table, if the price of the good produced is $5 and the wage rate is $400, then the marginal revenue product of the 7th worker is

Accepted Answer

A)  $300. 
B)  $60. 
C)  $12. 
D)  $400. 
A)  $300. 
B)  $60. 
C)  $12. 
D)  $400.

Question 19

A monopolist will hire fewer workers than a competitive firm, other things being equal, because

Accepted Answer

A)  the monopolist exploits labor and other types of producers do not. 
B)  the monopolist must take account of the declining product price that must be charged in order to sell more units of the product. 
C)  the monopolist is more efficient. 
D)  diminishing marginal productivity of labor is more severe for a monopolist. 
A)  the monopolist exploits labor and other types of producers do not. 
B)  the monopolist must take account of the declining product price that must be charged in order to sell more units of the product. 
C)  the monopolist is more efficient. 
D)  diminishing marginal productivity of labor is more severe for a monopolist.

Question 20

All of the following make the demand for labor more elastic EXCEPT

Accepted Answer

A)  greater elasticity of demand for the final product. 
B)  the longer the time period under consideration. 
C)  the smaller the proportion of total costs accounted for by labor. 
D)  the easier it is to substitute another input for labor. 
A)  greater elasticity of demand for the final product. 
B)  the longer the time period under consideration. 
C)  the smaller the proportion of total costs accounted for by labor. 
D)  the easier it is to substitute another input for labor.

Exam 28: The Labor Market: Demand, Supply and Outsourcing

-Refer to the above table. For each level of employment of labor shown

Which of the following statements is TRUE about the market and individual firm's supply curve for labor?

The individual firm operating in a perfectly competitive labor market

The price elasticity of demand for labor will be smaller, the

-In the above figure, the competitive firm will employ the quantity of labor

A profit-maximizing firm will hire workers up to the point at which

When the price of a product decreases, the marginal revenue product curve in a perfectly competitive market

-In the above table, what is the marginal revenue product of the 4th worker?

A firm in a competitive input market can

The supply of labor to the individual firm in a perfectly competitive market is

What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

The equilibrium wage rate in an industry is found by

For a perfectly competitive firm, the value of the marginal product of labor falls as more workers are hired because of the diminishing

For a firm that uses land, labor and capital as inputs, how should the inputs be utilized in order to minimize total costs?

-In the above figure, if the wage rate fell below Wb, in the short run the firm would

If we assume competitive labor markets, the supply curve of labor when the firm is a monopoly is

The demand for labor is

-According to the above table, if the price of the good produced is $5 and the wage rate is $400, then the marginal revenue product of the 7th worker is

A monopolist will hire fewer workers than a competitive firm, other things being equal, because

All of the following make the demand for labor more elastic EXCEPT

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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